Somerset Hills Bancorp (Nasdaq:SOMH) (the "Company"), parent
company of Somerset Hills Bank (the "Bank"), today reported first
quarter net income of $402,000 for 2013, a 51.0% decline from the
$820,000 earned in the first quarter of 2012. First quarter diluted
earnings were $0.07 per share for 2013 and $0.15 per share for
2012. First quarter 2013 results include $419,000 of pretax
expenses related to the pending merger with Lakeland Bancorp, Inc.
("Lakeland") and amount to $352,000 on an after-tax basis. Net
income of the first quarter of 2013 excluding these merger-related
expenses was $754,000, a decline of 8.0% from the same quarter of
2012. Excluding merger-related expenses, fully diluted net income
per share for the first quarter of 2013 was $0.14, a 6.7% decrease
from the first quarter of 2012.
Stewart E. McClure, Jr., President and CEO, noted, "The Company
continues to be challenged by the difficult economic operating
environment for banks. Our net interest margin along with that of
our industry peers has been under duress as longer term assets
reprice at increasingly lower levels and banks are hesitant to
extend the maturities of their securities portfolios in
anticipation of a rise in interest rates in the future. As
expected, our first quarter results for 2013 were adversely
affected by a significant rise in expenses related to our pending
merger with Lakeland. While we look forward to the consummation of
our merger with Lakeland, the Company remains focused on
maintaining our excellent credit quality and disciplined approach
to cost management."
Net Interest Income (Tax Equivalent Basis)
Fully taxable equivalent ("FTE") net interest income for the
first three months of 2013 was $2.8 million, down $319,000 or
10.1%, from the $3.1 million earned in 2012. The decline in net
interest income during 2013 was attributable to a 47 basis-point
narrowing in first quarter net interest margin to 3.37% from 3.84%
in the first quarter of 2012, partly offset by a 3.2% increase in
average interest-earning assets to $340.2 million in 2013 from
$329.6 million in 2012. The decline in the first quarter 2013 net
interest margin was largely due to a $30.6 million decline in
average securities to $23.1 million from $53.7 million in
the first quarter of 2012 that led to a $29.9 million growth
in average interest bearing deposits with banks to
$70.2 million in the 2013 quarter from $40.3 million in
the first quarter of 2012. The growth in average interest
earning assets resulted from an $11.0 million increase in
average loans to $243.5 million during the first quarter of
2013 versus $232.5 million in the same quarter of 2012.
Non-Interest Income
Non-interest income decreased $32,000 or 5.8% to $519,000 in the
first quarter of 2013 from $551,000 in the first quarter of 2012,
primarily due to a $41,000 decline in gains on sales of residential
loans at Sullivan Financial Services, Inc., a wholly-owned mortgage
banking subsidiary of the Bank, partially offset by a $9,000
increase in deposit service fees to $80,000 in the first quarter of
2013 from $71,000 in the first three months of 2012. A decline in
Sullivan's origination volume was primarily responsible for the
decline in mortgage banking income.
Non-Interest Expense
Non-interest expense increased 10.4% to $2.6 million for
the first quarter of 2013 from $2.3 million for the same
period of 2012. Included in non-interest expense in the first
quarter of 2013 were merger‑related expenses of $419,000. Excluding
these merger-related expenses, adjusted non-interest expense
decreased by $177,000 or 7.6% to $2.1 million for the three
months of 2013 from $2.3 million in the first quarter of 2012.
The decline in operating expenses was primarily due to decreases in
personnel, office-related and other non-interest expenses.
Management continues to proactively manage its expense
containment efforts.
Provision for Income Taxes
The Company recorded first quarter income tax provisions of
$317,000 for 2013 and $438,000 for 2012. The effective tax
rates were 44.1% and 34.8% for the first quarter of 2013 and 2012,
respectively. The increase in the effective tax rates for the
first three months of 2013 over the same period of 2012 was
primarily due to the impact of the merger-related expenses. If both
taxable income and the income tax provision for the first quarter
2013 were adjusted to exclude the impact of merger-related costs,
the adjusted effective tax rate would be 33.7%.
Asset Quality
The first quarter provision for loan losses was $25,000 in 2013
versus $75,000 for 2012. A net recovery of $9,000 was
recorded in the first quarter of 2013, while net charge-offs of
$56,000 were recorded in the first quarter of last year. The
allowance for loan losses amounted to $3.2 million, or 1.30%
of total loans, at March 31, 2013; $3.2 million, or 1.31% of
total loans, at December 31, 2012; and $3.0 million, or
1.30% of total loans at March 31, 2012.
Non-accrual loans at March 31, 2013 were $746,000,
representing 0.30% of total loans, and $136,000, or 0.06% of total
loans at March 31, 2012. The non-performing asset ratio, which
is defined as nonaccrual loans and OREO as a percentage of total
assets, was 0.21% at March 31, 2013 and 0.04% at
March 31, 2012. The Company had no OREO at both March 31,
2013 and 2012 and troubled debt restructured loans ("TDRs") were
$2.3 million and $343,000 at March 31, 2013 and 2012,
respectively. Loans past due 90 days or more and still
accruing amounted to $416,000 at March 31, 2013 compared with
none at March 31, 2012. As of March 31, 2013, the Company had
$205,000 in loans delinquent 30 to 89 days, representing 0.08% of
total loans, versus $854,000, or 0.37%, of total loans at
March 31, 2012.
Financial Ratios
As of March 31, 2013, the Company's tangible common equity ratio
and tangible book value per share were 11.74% and $7.78,
respectively. As of March 31, 2012, the Company's tangible
common equity ratio and tangible book value per share were 11.84%
and $7.63, respectively.
Forward-Looking Statements
This news release contains certain forward-looking
statements which are based on certain assumptions and describe
future plans, strategies and expectations of the Company. These
forward-looking statements are generally identified by use of the
words "believe," "expect," "intend," "anticipate," "estimate,"
"project," or similar expressions. The Company's ability to predict
results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse
effect on the operations of the Company and its subsidiaries
include, but are not limited to, changes in interest rates, general
economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board, the quality or
composition of the loan or investment portfolios, demand for loan
products, deposit flows, competition, demand for financial services
in the Company's market area and accounting principles and
guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not
be placed on such statements. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
|
SOMERSET HILLS
BANCORP |
Selected Consolidated
Financial Data |
(Unaudited) |
|
|
|
|
Quarter Ended
March 31, |
($ in thousands, except per share data) |
2013 |
2012 |
Income Statement Data: |
|
|
Net interest income |
$ 2,784 |
$ 3,099 |
Provision for loan losses |
25 |
75 |
Net interest income after loan
loss provision |
2,759 |
3,024 |
Non-interest income |
519 |
551 |
Non-interest expense |
2,559 |
2,317 |
Income before income taxes |
719 |
1,258 |
Income tax expense |
317 |
438 |
Net income |
$ 402 |
$ 820 |
Diluted earnings per share |
$ 0.07 |
$ 0.15 |
Balance Sheet Data: |
|
|
At period end |
|
|
Total assets |
$ 355,927 |
$ 343,690 |
Loans, net |
242,230 |
228,776 |
Loans held for sale |
2,557 |
1,495 |
Allowance for loan losses |
3,192 |
3,001 |
Investment securities held to
maturity |
9,354 |
9,936 |
Investment securities held for
sale |
12,982 |
42,177 |
Deposits |
307,541 |
294,273 |
Borrowings |
5,500 |
7,500 |
Shareholders' equity |
41,781 |
40,690 |
Book value per share |
7.78 |
7.63 |
Tangible common equity
ratio |
11.74% |
11.84% |
Average for the period |
|
|
Loans |
$ 243,463 |
$ 232,507 |
Interest-earning assets |
340,167 |
329,618 |
Total assets |
360,606 |
350,749 |
Shareholders' equity |
41,984 |
40,957 |
Diluted shares outstanding (in
thousands) |
5,454 |
5,381 |
|
|
|
Performance
Ratios/Amounts: |
|
|
Return on average assets |
0.45% |
0.94% |
Return on average equity |
3.88% |
8.05% |
Fully taxable equivalent net
interest margin |
3.37% |
3.84% |
Efficiency ratio* |
64.0% |
62.7% |
Fully taxable equivalent net
interest income |
$ 2,827 |
$ 3,146 |
|
|
|
Asset Quality: |
|
|
Net charge-offs
(recoveries) |
$ (9) |
$ 56 |
At period end |
|
|
Nonaccrual loans |
746 |
136 |
OREO property |
-- |
-- |
Total nonperforming assets |
746 |
136 |
Loans past due 90 days or more
and still accruing |
416 |
-- |
Troubled debt restructured
loans |
2,255 |
343 |
Loans past due 30 to 89 days
and still accruing |
205 |
854 |
Nonaccrual loans to total
loans |
0.30% |
0.06% |
Nonperforming assets to total
assets |
0.21% |
0.04% |
Allowance for loan losses to
total loans |
1.30% |
1.30% |
Allowance as a % of
nonperforming loans |
428% |
2207% |
|
|
|
* Represents
non-interest expense excluding merger-related costs divided by the
sum of fully taxable equivalent net interest income and
non-interest income excluding any investment securities gains or
losses for the period. |
|
|
SOMERSET HILLS
BANCORP |
Statement of
Operations |
(Dollars in thousands,
except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
Quarter Ended
March 31, |
|
2013 |
2012 |
INTEREST INCOME |
|
|
|
|
|
Loans, including fees |
$ 2,793 |
$ 3,026 |
Investment securities |
181 |
403 |
Interest bearing deposits with
other banks |
45 |
26 |
Total interest income |
3,019 |
3,455 |
|
|
|
INTEREST EXPENSE |
|
|
Deposits |
188 |
290 |
Federal Home Loan Bank
advances |
47 |
66 |
Total interest expense |
235 |
356 |
|
|
|
Net Interest Income |
2,784 |
3,099 |
|
|
|
PROVISION FOR LOAN LOSSES |
25 |
75 |
|
|
|
Net Interest Income after
Provision for Loan Losses |
2,759 |
3,024 |
|
|
|
NON-INTEREST INCOME |
|
|
Service fees on deposit
accounts |
80 |
71 |
Gains on sales of mortgage
loans, net |
266 |
307 |
Bank owned life insurance |
66 |
67 |
Other income |
107 |
106 |
Total Non-Interest Income |
519 |
551 |
|
|
|
NON-INTEREST EXPENSE |
|
|
Salaries and employee
benefits |
1,253 |
1,367 |
Occupancy expense |
347 |
349 |
Advertising and business
promotions |
30 |
29 |
Printing, stationery and
supplies |
18 |
45 |
Data processing |
133 |
131 |
Merger-related costs |
419 |
-- |
Other operating expense |
359 |
396 |
Total Non-Interest Expense |
2,559 |
2,317 |
|
|
|
Income before Provision for
Taxes |
719 |
1,258 |
|
|
|
PROVISION FOR INCOME TAXES |
317 |
438 |
|
|
|
Net
income |
$ 402 |
$ 820 |
|
|
|
Diluted earnings per common share |
$ 0.07 |
$ 0.15 |
|
|
SOMERSET HILLS
BANCORP |
Balance
Sheets |
(Dollars in
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
March 31, |
December 31, |
|
2013 |
2012 |
ASSETS |
|
|
|
|
|
Cash and due from banks |
$ 4,977 |
$ 7,544 |
Interest bearing deposits at other banks |
65,475 |
75,127 |
Total cash and cash
equivalents |
70,452 |
82,671 |
|
|
|
Interest bearing deposits in other financial
institutions |
775 |
775 |
Loans held for sale |
2,557 |
6,977 |
Investment securities held to maturity
(Approximate market value |
|
|
of $9,587 in 2013 and $9,186 in 2012) |
9,354 |
8,900 |
Investments available for sale |
12,982 |
13,370 |
Restricted stock, at cost |
743 |
743 |
|
|
|
Loans receivable |
245,422 |
241,911 |
Less allowance for loan
losses |
(3,192) |
(3,158) |
|
|
|
Net loans receivable |
242,230 |
238,753 |
|
|
|
Premises and equipment, net |
4,834 |
4,868 |
Bank owned life insurance |
8,311 |
8,245 |
Accrued interest receivable |
978 |
1,036 |
Prepaid expenses |
775 |
790 |
Other assets |
1,936 |
1,802 |
|
|
|
Total assets |
$ 355,927 |
$ 368,930 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
LIABILITIES |
|
|
Deposits: |
|
|
Non-interest bearing deposits -
demand |
$ 82,817 |
$ 87,279 |
Interest bearing deposits |
|
|
NOW, money market and
savings |
192,154 |
198,595 |
Certificates of deposit, under
$100,000 |
16,852 |
17,799 |
Certificates of deposit,
$100,000 and over |
15,718 |
16,514 |
Total
deposits |
307,541 |
320,187 |
|
|
|
Federal Home Loan Bank advances |
5,500 |
5,500 |
Other liabilities |
1,105 |
1,395 |
|
|
|
Total
liabilities |
314,146 |
327,082 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Preferred stock - 1,000,000
shares authorized, none issued |
-- |
-- |
Common stock - authorized
9,000,000 shares |
|
|
of no par value;issued and
outstanding, 5,370,000 |
|
|
shares in 2013 and 5,369,673
shares in 2012 |
37,156 |
37,143 |
Retained earnings |
4,306 |
4,333 |
Accumulated other comprehensive
income |
319 |
372 |
|
|
|
Total stockholders'
equity |
41,781 |
41,848 |
|
|
|
Total liabilities and stockholders'
equity |
$ 355,927 |
$ 368,930 |
CONTACT: Stewart E. McClure, Jr.
President & CEO
908.630.5000
Alfred J. Soles
Executive VP & CFO
908.630.5018
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